Consumer sentiment remains at relatively low levels, according to the Reuter’s/University of Michigan’s consumer sentiment index released on Friday, which gauges sentiment in mid-month. January’s mid-month reading came in at 71.3, down 1.6 points compared with the final December reading. During most of 2012, the sentiment index readings were above 75 and in a few cases higher than 80.

The expectations component of the index was at its lowest since mid-2011 — around the time of the debt-ceiling fracas — declining 1.1 points to 62.7 in mid-month. Current conditions fell 2.2 points to 84.8, a drop coming on top of a decline of 3.7 points in December. Talk of the fiscal cliff, whether or not it was full understood, might have had a depressive effect on consumer sentiment.

The University of Michigan’s Consumer Survey Center involves questions to 500 households each month on their attitudes about the economy as well as their own financial conditions. Consumer sentiment has, on the whole, been a reasonably prescient predictor of the direction of consumer spending, the main component of the U.S. economy.

Debt Ceiling Deal in the Works?

On the Friday the Republican caucus of the House of Representatives let it be known that they would vote on a proposal this week that would extend the debt ceiling for another three months, with the added condition that Congress takes no pay until a budget is passed, something that hasn’t happened since fiscal 2011 (continuing resolutions have substituted for actual budgets since then). Since most Senators and Representatives are of independent means, that part of the proposal seems mostly symbolic.

It’s the latest tactical move in the quarrel over the budget, and seems to represent a move away from Republican demands that budget cuts be enacted as the price of raising the debt ceiling. It isn’t clear yet whether the president and the Senate will be willing to go along with a three-month extension. President Obama, for one, has spoken against the notion of such a short-term deal.

Without some kind of agreement on the debt ceiling, the government will not be able to pay its bills within a month or so. A debt ceiling deal would not, however, resolve the question of what to do about sequestration, or scheduled across-the-board cuts in federal spending that were put off in the early hours of 2013 for a mere three months. That question seems likely to inspire a new round of quarreling within the federal government after any resolution of the debt ceiling question, however temporary.

Fewer Banks Went Bust in ’12

Over the weekend the FDIC became receiver of 1st Regents Bank of Andover, Minn., which thus became the second U.S. bank to fail in 2013, following the folding of first bank of the year, Sunwest Bank of Irvine, Calif., a week before. The rate of bank failures has slowed down considerably recently. All together in 2012, some 51 U.S. banks failed compared to 92 in 2011 and 157 in 2010, but more to the point, only one bank failed nationwide in Dec. 2012, and only three in Nov. 2012.

Most of the banks that failed last year were community banks with assets between $100 million and $1 billion. Only one bank with assets of more than $1 billion went belly up in last year, compared with seven of that size in 2011 and 23 in 2010.

Wall Street ended Friday mixed. The Dow Jones Industrial Average gained 53.68 points, or 0.39 percent, while the S&P 500 was up 0.34 percent. The Nasdaq edged down a scant 0.04 percent.